Market power and regulation: the last great US department store consolidation?
International Journal of Retail & Distribution Management
ISSN: 0959-0552
Article publication date: 6 February 2007
Abstract
Purpose
To examine the impact of the merger of the two largest US department store companies on the competitive state of the sector and specifically the anti‐trust implications of the consolidation.
Design/methodology/approach
Based on semi‐structured interviews with leading US department store executives as well as an ongoing close dialogue with US retail analysts.
Findings
The consolidation raises considerable anti‐trust issues with the creation of a $30bill sales company. However, consistent with previous recent rulings, the Federal Trade Commission has adopted a broad view of the department store market from the standpoint that the consolidation is essentially defensive – in short, the sector is failing because it is not a separate and distinct market. However, the divestiture of 75 stores will give competitors footholds in new markets thereby changing the geography of competition in many catchments. This is likely to be the largest consolidation that the competition authorities will effectively allow, representing the last opportunity for the sector to become a more robust competitor against alternative formats that have intervened in its key product lines.
Originality/value
Recent restructuring of the US department store industry has generated a relatively limited academic literature, despite considerable M&A activity, subsequent organisational reorganisation, and sales of $88 billion per year. Transformation of the competitive landscape of the industry raises important issues of market regulation and corporate strategy.
Keywords
Citation
Wood, S. and Wrigley, N. (2007), "Market power and regulation: the last great US department store consolidation?", International Journal of Retail & Distribution Management, Vol. 35 No. 1, pp. 20-37. https://doi.org/10.1108/09590550710722323
Publisher
:Emerald Group Publishing Limited
Copyright © 2007, Emerald Group Publishing Limited